tag:blogger.com,1999:blog-1603438996450817644.post436177527467760465..comments2024-01-12T01:56:21.933-08:00Comments on chokka blog: Bikes, Businesses and GearingKevin Haguehttp://www.blogger.com/profile/14587343060415859159noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-1603438996450817644.post-71972791418699214062011-06-27T02:20:01.741-07:002011-06-27T02:20:01.741-07:00UK retail industry just seeing the damaging effect...UK retail industry just seeing the damaging effects of a toxic combination of operational gearing and financial gearing. As this is entirely obvious to an mba or economics student there has to be something of an agency problem at work here ie majority of an enterprise value is terminal value so generally it makes sense economically to not let things go bust. However, the incentives around private equity seem to be skewed to short term ie particular people having in incentive to trouser a lot of cash in the early days (the good times) and not worry too much too far ahead - Phoenix 4 being an extreme example!Eoin Jenningsnoreply@blogger.com